LU-VE incontra la comunità finanziaria 24 ottobre 2016
Disclaimer This presentation has been prepared by LU-VE S.p.A. for information purposes only and for use in presentations of the Group s results and strategies. For further details on the LU-VE Group, reference should be made to publicly available information. Statements contained in this presentation, particularly the ones regarding any LU- VE Group possible or assumed future performance, are or may be forward looking statements and in this respect they involve some risks and uncertainties. Any reference to past performance of the LU-VE Group shall not be taken as an indication of future performance. This document does not constitute an offer or invitation to purchase or subscribe for any shares and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. By attending the presentation you agree to be bound by the foregoing terms. 2
CONTENTS 1. LU-VE business model highlights 2. H1 2016 results 3. Spirotech acquisition 4. Looking forward 3
1 LU-VE business model highlights PRODUCTS % of sales (1) BREAKDOWN OF SALES 2015 BY APPLICATION APPLICATIONS TYPE OF CUSTOMER Heat exchangers 60% Refrigeration Air conditioning Special applications (whitegoods, transport etc.) OEM Air cooled equipment Glass doors for refrigerated display cabinets 31% Refrigeration Air conditioning Power Generation Distributors/Installers 5% Refrigeration OEM Close control 4% Air conditioning Distributors/Installers (1) Pro-forma data based on 2015 actual results plus Spirotech 4
1 LU-VE business model highlights LU-VE sells its products in more than 100 countries Germany is its main export market (13% of total sales) Breakdown of sales 2015 by geographical area (1) RoW 20% Europe 55% Italy 25% (1) Pro-forma data based on 2015 actual results plus Spirotech 5
1 LU-VE business model highlights Heat exchangers 6
1 LU-VE business model highlights Refrigeration Storage of fresh foods in general and fast freezing of perishable foods 7
1 LU-VE business model highlights Air Cooled Equipment - Air Conditioning 8
1 LU-VE business model highlights Mobile applications 9
H1 2016 results September 2016, 28th
H1 2016 results A. Financial highlights B. Net sales breakdown C. Profit & Loss D. Net working capital E. Net cash flow F. Balance sheet G. The path ahead 11
A Financial highlights (IFRS) Consolidated Sales: 116,2m (+10,8% vs. 1H15) + 10,3% at constant exchange rates EBITDA margin: 13,0% (vs. 11,8% in 1H15) (vs 13,4% at constant FX rates) Group Net Income margin: 6,6.% (vs 5,7% in 1H15) NFD: 15,4m (vs. 65,0 m as of 30 Jun 2015) Net cash generation (12 months adjusted) : 11,1 m (vs 12,2 as of June 2015) m H1 2016 H1 2015 Growth Growth (1) Sales of finished products (2) 116,2 100,0% 104,9 100,0% +10,8% +10,3% EBITDA 15,1 13,0% 12,5 11,8% +21,2% EBITDA Adjusted (3) 15,9 13,7% 14,4 13,7% +10,4% Group Net Income 7,7 6,6% 6,0 5,7% +27,5% Net Financial Position (debt) (15,4) (65,0) Net cash generation adj (4) 11,1 12,1 Notes (1) At constant exchange rates (3) Excluding one time costs and FX effect on EBITDA (2) Excluding other sales (4) See page 10 for details 12
B Net sales breakdown Breakdown of sales by product H1-16 ( 116,2 m) Products /000 /000 % H1 16 H1 15 % % Heat Exchangers 61.454 52,9% 58.394 55,7% +5,2% Air Cooled Eqpt 41.886 36,0% 35.514 33,9% +17,9% Glass Doors (1) 8.185 7,0% 6.673 6,4% +22,7% Close Control 4.707 4,0% 4.324 4,1% +8,9% TOTAL 116.232 100,0% 104.905 100,0% +10,8% (1) Glass doors for refrigerated display cabinets 13
B Net sales breakdown Breakdown of sales by application H1-16 ( 116,2 m) Applications /000 /000 % H1 16 H1 15 % % Refrigeration 82.828 71,3% 74.766 71,3% +10,8% Air Conditioning 19.709 17,0% 18.533 17,7% +6,3% Specials Applications 11.146 9,6% 10.380 9,9% +7,4% Power Gen 2.549 2,2% 1.226 1,2% +107,9% TOTAL 116.232 100,0% 104.905 100,0% +10,8% 14
B Net sales breakdown Key highlights H1 2016 ( 116,2 m) 1. Robust growth (+ 10,3% at constant FX) 2. Refrigeration & air conditioning (88% of total sales): + 9,9% 3. Higher penetration in some key customers 4. Strong recovery in air conditioning for railways application 5. Glass doors for refrigerated cabinet (acquired in 2014): + 22,7% 6. High growth in domestic markets (Italy + 14%, Germany + 11%, France + 31%, Sweden + 22%) and Russia (+14%) 15
C Profit & Loss (IFRS) See EBITDA bridge analysis Low taxation due to full benefit of ACE from IPO in July 15 Net income + 31,1% Transition to IFRS completed Consolidated Profit & Loss Delta % H1 2016 % sales H1 2015 % sales Reclassified (000 Euro) 2016 vs 2015 Sales and operating income 116.780 100,0% 106.076 100,0% 10,1% Purchases of materials (59.302) 50,8% (54.959) 51,8% Inventory increase (decrease) 922-0,8% 2.463-2,3% Services (17.813) 15,3% (16.490) 15,5% Labour cost (24.573) 21,0% (23.878) 22,5% Other operating costs (884) 0,8% (732) 0,7% Total operating costs (101.650) 87,0% (93.596) 88,2% 8,6% EBITDA 15.130 13,0% 12.480 11,8% 21,2% Increase (decrease) of derivatives fair value (188) 0,2% 333-0,3% Depreciation (6.277) 5,4% (5.983) 5,6% Gain (loss) of non current assets 37 0,0% 26 0,0% EBIT 8.702 7,5% 6.856 6,5% 26,9% Net financial charges 14 0,0% 84-0,1% EBT 8.716 7,5% 6.940 6,5% 25,6% Income taxes (1.022) 0,9% (906) 0,9% Group net income 7.694 6,6% 6.034 5,688% 27,5% Minority interest 323 413 Net income 7.371 6,3% 5.621 5,3% 31,1% 16
C Profit & Loss: EBITDA bridge analysis (IFRS) Fx effect: negative on EBITDA by 0,5 M One time restructuring costs in China = 0,3 M EBITDA increase thanks to volume and margin = 1,7 M One time adjustments on H1 15 EBITDA = 0,9 M (IFRS) 17
D Net working capital (IFRS) Tight control of working capital Net Working Capital: H1 2016 vs H1 2015 Seasonality in working capital needs uro/000 Days 30/06/2016 30/06/2015 Days Slightly improved vs H1 2015 Stock 25.350 41 24.667 41 A/reicevable 49.984 81 48.023 80 Working capital 75.334 122 72.690 121 A/payable 46.857 109 42.295 107 Net working capital 28.477 46 30.395 51 % on net sales LTM 12,8% 14,1% 18
E Net cash flow (IFRS) Consistently strong cash generation Net Cash / (net debt) m Net financial position as of June 15 (IFRS) ( 65,0) Net financial position as of June 16 (IFRS) ( 15,4) Decrease in net financial position 49,6 49,6 + Dividends paid: June 15 - June 16 3,9 Net cash generation adjusted 2010-2015 ( m): + Accelerated Capex program (above maintenance capex) 4,0 + Treasury stock purchase 0,8 + Minorities acquisitions 2,3 - Capital increase ( 49,5) = Total Normalized Net Cash Flow 11,1 (1) 2010-2013 ITA GAAP 2014-2015 IFRS 19
F Balance sheet (IFRS) Seasonal working capital needs Strong financial structure Debt capacity to finance acquisitions Consolidated Balance Sheet Reclassified (000 Euro) 30/06/2016 % net invested capital 31/12/2015 % net invested capital Net intangible assets 39.812 39.123 39828 Net tangible assets 92.678 89.131 90947 Pre-paid taxes 3.426 2.379 1896 Financial assets 923 921 905 Non current assets (A) 136.839 96,0% 131.554 108,2% 133.576 97,0% Inventory 25.350 24.625 24.667 A/receivable 49.984 33.761 48.023 Other receivables and current assets 6.788 6.145 5.362 Current assets (B) 82.122 64.531 78.052 30/06/2015 % net invested capital A/payable 46.857 47.072 42.295 Other payable and current liabilities 13.981 13.065 14.260 Current liabilities (C) 60.838 60.137 56.555 Working capital (D=B-C) 21.284 14,9% 4.394 3,6% 21.497 15,6% Personnel provisions 3.580 3.305 3.435 Deferred taxes 9.818 8.866 11.035 Risk provisions 2.158 2.177 2.859 Long term liabilities (E) 15.556 10,9% 14.348 11,8% 17.329 12,6% Net invested capital (A+D-E) 142.567 100,0% 121.600 100,0% 137.744 100,0% Group net worth 124.861 122.355 69.220 Minority interest 2.281 3.443 3.522 Total group net worth 127.142 89,2% 125.798 103,5% 72.742 52,8% M/L term net financial position 83.753 93.817 73.387 Short term net financial position (68.328) (98.015) (8.385) Net financial position 15.425 10,8% (4.198) -3,5% 65.002 47,2% Net worth and net financial position 142.567 100,0% 121.600 100,0% 137.744 100,0% 20
G The path ahead (5 years timeframe) Growth, expansion and acquisitions Organic growth Geographic expansion Growth of turnover (7,7% CAGR 09-16 LTM 6,3% organic ) Strengthening of the EBITDA margin (Adj H1 16: 14%) CAPEX anticipation envisaged within the timeframe (CAPEX annual average in last three years~ 8.5 m) Strict control of operating working capital (~10-15% of turnover) Development of new products/applications Strong focus on emerging economies with high potential Close relationship with end user Greenfield investments in emerging economies/enlargement of existing plants Acquisitions Identify and carry out M&A which make good industrial sense Possible targets for LU-VE include companies which are Active in the same business: The Americas Emerging economies: see Spirotech acquisition in India Europe Own complementary technology and/or products Possible use of further financial leverage 21
Acquisition of Spirotech September 2016
Spirotech acquisition A. Transaction overview B. Spirotech at a glance C. Transaction strategic rationale D. Transaction financials 23
A Transaction overview On October 5 th 2016, Luve acquired 95% of Spirotech Spirotech is a leading and fast growing Indian producer of heat exchanger for HVAC (1) industry, home appliances and transportation: turnover of 21 (2) millions with an average EBITDA margin > 20% doubled the turnover during the last 5 years world class customers in Europe, US and India strong management team with international experience state of the art manufacturing plant with expansion opportunities Ideal base to expand production in India, to benefit from long term trend in creation and expansion of cold chain in India and Asia Total consideration (3) : 7,3x FY16 EBITDA 15,6x FY16 Net Earnings (1) Heating Ventilation Air Conditioning (2) Based on 1 = 75 INR (3) Based on audit financial statement FY16 24
B. Spirotech at a glance Incorporated in 1994 by Dr. Malhotra e Mr. Srinivasan Based in Bhiwadi (65 km south of New Delhi), Rajasthan Situated on 40,500 sq.m plot, 11.000 sq.m new facility (2012) Opportunity to double the plant Average 350 employees 25
B. Spirotech at a glance Financial highlights FY16 - Value Drivers (1) Sales 21 M Doubled sales in the last 5 years High growth potential thanks to: Existing strong pipeline of new customers Further expansion of the customer basis thanks to LUVE sales network EBITDA > 20% Demonstrated ability to co-design products with highly recognized, highly demanding top customers in Europe and US High quality (defective PPM < 400), high volume production capacity (3 M coils p.a), coupled with extremely competitive production costs Net working capital Fixed assets NFD + Net Worth Avg 33% sales 8,5 M 14,4 M Opportunity to improve cash cycle due to synergies with LUVE in purchasing and logistic New facility built in 2012, state of the art machineries Low maintenance capex Opportunity to double production plant High return on invested capital (> 25%) Positive net financial position ( 0,8 M as of July 16) Net worth: 15,2 M (1) All value based on 1 = 75 INR 26
C. Transaction strategic rationale The overall M&A strategy of LU-VE can be summarized as follows: IPO to raise financial resources Expected consolidation of the HVAC industry Expansion in Asia and North America The interest in Spirotech is driven by the following: Expansion of Spirotech customer basis thanks to LUVE sales network Expansion in the Indian market with LUVE products related to the cold chain infrastructure Transfer of customers/products from other Group European plants based on logistic and technological evaluation Expansion in Middle East due to the logistic advantage 27
D. Transaction financials Valuation for 100%: MINR 2520 (MEUR 33,6) - based on a net cash position of 57 MINR (MEUR 0,8) as of 31/7/16 (1) Acquired 95% 5% kept by Managing Director (co-founder) Put & Call based on 3 years average performance Implied multiples (2) : o EBITDA (FY16): 7,3x o P\E (FY16): 15,6x (1) All value based on 1 = 75 INR (2) Based on audit financial statement FY16 28
D. Transaction financials Impact of Acquisition on Reported Earnings per Share LUVE Spirotech Combined Total earnings ( 000) 9.099 2.159 11.258 Number of shares 19.553.206 2.544.805 19.553.206 Earnings per shares 0,47 0,85 0,58 Share price 10,00 13,20 10,00 Price / earnings ratios 21,49x 15,57x 17,37x Based on: Lu-Ve audit financial statement as of 31/12/15 Spirotech audit financial statement as of 31/3/2016 1 = 75,0 INR Acquisition price = 2520 M INR = 33,6 M 29
4. Looking forward 1. Integration of Spirotech 2. Filing MTA spring 2017 3. Accelerated capex program 4. M&A activity (about 50 millions firepower) 30